Our role in promoting foreign trade

Less risk in exports and investments? Best try it with insurance.

Interview with Dr Axel Radü, Head of Structuring Advisory

With goods and services valued at EUR 1.3 trillion, Germany exported more in 2021 than ever before in its history. The Federal Republic also supports German exports – for example, through guarantees provided by the export credit insurer Euler Hermes Deutschland, which has a mandate to carry out this task. Dr Axel Radü, Head of Structuring Advisory, explains the importance of export credit insurance for the German and European economy.

The coronavirus pandemic, war against Ukraine – global trade relations are under massive strain. What role do export credit agencies currently play?

Risks are nothing new in foreign trade. However, the crises just mentioned show that there can always be entirely unexpected disruptions that may substantially affect an exporter’s business. This is why export credit agencies are more relevant than ever before.

This does not apply solely to exports, but also to direct investments by German companies, which often appear much riskier in the light of the crises just mentioned. Here, too, the Federal Republic supports German investors with guarantees for investment loans that cover political risks.

Which risks do export credit agencies cover?

The “traditional” risks covered relate to three dimensions.
First is the importer's creditworthiness: Are they able to allocate sufficient funds to pay for the deliveries? Second is the conversion of the local currency and currency transfer. Third is political risks, which include highly current sanction-related matters.

The Hermes tool kit is comprehensive. The exporter can have the risks covered that it incurs during the production period or, later on, any claims that arise in connection with a supplier credit or – if a bank does the financing – a buyer credit.

How exactly does KfW IPEX-Bank support exporters?

We support exporters in international competition by offering their customers buyer credits so they can purchase machines and systems from Germany and Europe. We have become specialised in larger, more complex projects. We work very closely with Hermes to hedge risk. But we also cooperate with all major European export credit agencies so we can fulfil our mandate to support the German and European export industry in the best possible way.

What is the significance of sustainability in export credit insurance?

Sustainability is high on the agenda not just for Euler Hermes, but for all European export credit agencies. The trend is clear: sustainability aspects will have more of an influence in future decisions on insurance cover.